In November, he dropped consumer goods giant Reckitt (LSE: RKT), formerly Reckitt Benckiser Group, from his flagship investment fund Fundsmith Equity. In February, he ejected quality assurance provider Intertek Group (LSE: ITRK), which I wrote about recently and said looked pricey but still a long-term buy for me.

Last month, it was the turn of Sage Group (LSE: SGE) to feel Mr Smith’s boot. He’s a supremely successful stock picker and it makes me wonder whether I should rule out buying these top British stocks for my own portfolio.

Would I sell these FTSE 100 stocks?

I have a personal interest, because Reckitt has long been one of my favourite FTSE 100 stocks. It promotes a broad portfolio of popular everyday brands such as Air Wick, Harpic, Dettol and Nurofen, that shoppers buy in bad times as well as good. I considered it a top British stock, even though it is relatively expensive. Today, it trades at 21 times earnings.

The Reckitt share price shot up in the early days of the pandemic, as people spent more on cleaning products, but then doubts set in. After November’s vaccine breakthroughs, investors decided other British stocks would reap greater rewards.

Reckitt is down 9% over the last year, and 7% over five years. It looks like Terry Smith has had enough. The forecast yield of 2.7%, covered 1.7 times by earnings, was not enough to tempt him to stay. Yet I would still consider Reckitt for my own portfolio, as a defensive stock delivering long-term growth and income. It recently posted a 4% rise in Q1 sales, while digital revenues jumped an impressive 24%. As it invests £2bn in developing new products, it remains a top British stock and would merit a place in my own portfolio, whatever Terry Smith thinks of it. If I’d already bought, I wouldn’t sell today.

Sage offers integrated accounting, payroll and payments solutions to businesses around the world. Four years ago, Goldman Sachs rated it a top British stock, as it migrated to a subscription-based model, which offered more cross-selling opportunities, and enjoyed high customer renewal rates.

Subsequent performance has been disappointing. The Sage share price is up just 5% over five years. It hasn’t even benefited from the recent stock market rally. Again, it looks like Mr Smith has had enough, but what about me?

I still rate these top British stocks

Last month’s first-half results showed underlying operating profit falling 11% to £191m, as profit margins shrank from 23.2% to 20.2%. This was primarily down to increased spending on marketing and product development, to promote its new cloud operation. Management said margins should improve, as this investment drives growth.

Personally, I like to see a company investing in its future, even if it takes a short-term hit. I also like the fact that Sage has been paying down debt, from £238m to £96m in the last year. It still looks like a top British stock to me. I would consider buying it for my portfolio, even if Mr Smith doesn’t have space in his.

The post Terry Smith has sold these 2 top British stocks. Here’s what I’d do now appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Sage Group. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

House prices are booming and so is the housebuilding sector. I think one of the best shares to buy in this sector is also the biggest, Barratt Developments (LSE: BDEV). Earlier this month it increased full-year expectations, as it completed more homes and sold them for higher prices. Today’s high demand looks set to continue, even after the stamp duty holiday expires.

My worry is that rising building costs will eat into profits as commodity prices spiral, while supply chain issues could slow completions. Unemployment could rise once furlough ends, making buyers feel poorer.

However, with the new-build market underpinned by the government-backed Help to Buy scheme, Barratt’s valuation of just 10.7 times forecast earnings and forward yield of 3.7% (covered 2.4 times) look tempting to me.

This also looks like one of the best shares to buy

Prudential (LSE: PRU) also merits a place on my list of best FTSE 100 shares to buy, in part due to its low valuation of just 12.6 times forward earnings. The insurer is now focusing on fast-growing Asian and African markets, offering a vast untapped market of the middle-classes look to build and protect their wealth. The opportunity is huge.

Share price growth has been strong lately with the stock up 43% in a year. There’s a danger it may idle after posting such quick-fire growth, despite that low valuation. Another potential concern is that Prudential’s negligible dividend leaves investors relying on growth. A planned $3bn equity raise aimed at reducing debt and funding opportunities could dilute the stock.

Despite this, sales are accelerating both in Asia and Africa as they emerge from the pandemic, so there’s a vast opportunity for investors willing to be patient.

FTSE 100 growth stock

I also rate quality assurance provider Intertek Group (LSE: ITRK) as one of the best shares to buy on today’s FTSE 100. Yesterday, it reported “solid” revenue growth of 2.7% year-to-date, speeding up in March and April when revenues jumped 9.3%. Sales are still below 2019 levels, but the group remains on track to hit this year’s targets. 

My concern is that the stock is expensive, trading at 30.9 times earnings. Recent growth has been good, but not that good. Especially since the yield is just 1.8%.

However, I think it’s a strong long-term opportunity as Intertek seeks new outsourcing opportunities in the $250bn global quality assurance market. It should also benefit from the global push to net zero carbon as companies battle to prove supply chains are clean.

I don’t expect instant success, but I never do when hunting down the best shares to buy. Instead, I prefer to focus on the long-term story and that remains promising. With all three stocks, I might wait to buy them on the dips.

The post Best shares to buy: I’d build my portfolio on these 3 FTSE 100 stocks appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek and Prudential. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

That doesn’t deter me from buying FTSE 100 stocks. Quite the opposite, in fact. UK shares have underperformed since the Brexit referendum more than four-and-half-years ago, but may now start to play catch-up. Brexit is largely settled and our vaccine programme is rolling out. The UK could suddenly find itself ahead of the game. Now wouldn’t that be a novel experience?

If I’m right, I think these two FTSE 100 stocks could do well in 2021 and beyond, and would consider adding them to my portfolio.

The UK should bounce back

BT Group (LSE: BT.A) has been staging a revival, its share price up more than a third in the past six months. Management is working hard on its modernisation programme, and recently delivered £352m in cost savings in just six months. This helped offset the Covid-19 impact, which hit BT Sport revenues and business activity in its enterprise units. Other FTSE 100 stocks have been hit a lot harder.

While BT’s profits fell around 20% during the early stages of the pandemic, at least it still posted profit – of just over £1bn in the first half of the year. It axed its dividend but plans to reinstate it next year. Openreach continues to roll out nicely.

BT’s earnings have declined for four years in a row, but that should reverse once current investments pay off and the country is liberated from lockdown. Many problems are priced in, with the company trading at just 6.9 times forward earnings. I would check out the BT share price before the dividend is reinstated, rather than afterwards.

These two FTSE 100 stocks could fly

I’d also take a close look at quality assurance provider Intertek Group (LSE: ITRK). I was just Googling away and spotted a headline from The Daily Telegraph saying “Intertek is a great business but the valuation is rich”. The article was written in March 2009 but the same headline could serve today. It trades at a premium valuation of 27.1 times earnings.

Inevitably, Intertek has been hit by the pandemic, with earnings down almost 10% to £941m in the four months to 31 October. Impressively though, management expects to cut debt this year, to between £570m and £590m.

The business has shown its resilience, while its product testing and certification and services are likely to be in demand once the global economy starts moving again. A return on capital employed a 47.9% is also a promising sign.

The shares were growing strongly before the crisis and could do so again. That toppy valuation could fall when earnings pick up.

Both FTSE 100 stocks appeal to me. I’d buy them before the next stock market rally.

The post I’d buy these 2 FTSE 100 stocks before UK shares rally again appeared first on The Twelfth Magpie.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Here are three FTSE 100 dividend-growing stocks I’d add to a diversified portfolio:

Fast-moving consumer goods

Unilever (LSE: ULVR) makes fast-moving consumer goods in the areas of food, home care and personal care and owns brands such as Dove, Comfort, Domestos, Hellman’s, Magnum, Sure, Radox and many others.

Generally, I’m keen on firms that peddle fast-moving consumer goods backed with well-known and successful brands because customers can be loyal, which often leads to a high level of repeat-purchasing. The product is used up by customers on a frequent basis, which means incoming cash flow can be reliable and predictable – ideal for building on to fuel a progressive dividend policy.

Over the past five years, the dividend has risen by just over 45% and at today’s share price close to 4,800p, the forward-looking dividend yield for 2019 is just over 3%. In April, the company reported that trading was off to a “solid” start for the year. I think the stock would make a decent core holding for my portfolio.

Quality assurance services

Intertek Group (LSE: ITRK) describes itself as a “total quality assurance provider to industries worldwide.” Trading has been good with earnings and cash inflow generally rising, and over the past five years, the dividend has advanced by more than 115%.

In May, the company reported a “good” start to the year with “robust” growth in revenue of 5.3% in the first four months of the trading year. Meanwhile, City analysts following the firm’s fortunes expect mid-single-digit advances in earnings this year and in 2020.

With the share price near 5,280p, the forward-looking dividend yield for 2019 is just under 2% and the earnings multiple is around 25. The valuation seems full, but Intertek strikes me as a quality outfit generating dependable cash flow, which is ideal for powering the progressive dividend policy. I think the firm has earned its high rating and I’d be tempted to buy some of the shares on dips and down-days.

Premium drinks

Diageo (LSE: DGE) produces alcoholic beverages and sells them around the world. Some powerful brands back the firm’s offering such as Bell’s, Gordon’s, Captain Morgan, Baileys, Smirnoff and Guinness. Such products fall into the category of fast-moving consumer goods and Diageo is known for its consistent cash inflows.

The dividend has risen by around 35% over the past five years. With the share price close to 3,318p, the forward-looking dividend yield for the current trading year to June 2019 sits just over 2% and the price-to-earnings rating is running just below 26. That’s not a low valuation, but the firm’s evergreen and steady performance justifies the rating, in my view.

The outlook is positive and City analysts following the firm expect earnings to grow by high single-digit percentages this trading year and next. I’d be keen to make the stock a core holding in my portfolio and would look for weakness in the stock market as an opportunity to pounce on the shares.

The post Forget a Cash ISA! I’d load up with these 3 FTSE 100 dividend growth shares appeared first on The Twelfth Magpie.

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Kevin Godbold has no position in any share mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Diageo and Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Intertek Group (LSE: ITRK) is a share whose price took a pasting in the wake of full-year results released in recent days. It might still command a premium rating, in this case a forward P/E ratio of 22.9 times, but I reckon this weakness represents a prime opportunity for dip buyers to grab a slice of the action.

The Footsie business — which tests, inspects and certifies products across a broad host of industries across the globe — has shed a tenth of its value despite reporting another year of strong progress in 2018. Indeed, revenues at constant currencies sprung 4.7% higher last year to £2.8bn, thanks to accelerating organic growth in the latter half of the period (up 4% over the six months to December versus a 3.4% rise reported for the January to June period).

The result prompted pre-tax profit to rise 4% at actual rates and encouraged management to supercharge the total 2018 dividend, up 39% year-on-year to 99.1p per share.

On the flip side…

Less-encouraging news, however, saw sales at Intertek’s Products division — a unit responsible for 60% of group revenues — slowed during the second half of 2018. And investors are fearful of a slow start to the new year because of the impact of President Trump’s trade wars.

Meanwhile, the Footsie firm’s elevated rating hasn’t done it any favours and intensified fears of further weakness as 2019 progresses. This is quite possible, and particularly in the face of strong comparatives for last year.

However, if you’re a long-term investor I still believe this dip provides a great buying opportunity as it arguably bakes in expectations of a near-term sales slowdown. 

Let’s not forget, Intertek’s outlook for the years ahead is extremely robust. As it said earlier this month: “The growing complexity faced by global corporations, higher quality and sustainability expectations from consumers and increased regulatory demand” means there’s plenty of scope for the huge quality assurance market to keep on swelling.

A great dividend grower

And through its broad international network — it has more than 1,000 facilities spanning 100 countries — Intertek’s well placed to keep winning business, and particularly so as its formidable cash flows bolster its geographical and operational handspan through additional acquisitions. The testing titan made four acquisitions in 2018 and it has the financial strength to embark on more M&A action too (strong free cash flow in 2017 improved an extra 3% last year to £350.6m).

It’s not a shock to see then that City analysts forecast Intertek will record a 4% earnings uplift in 2019 and will improve this to 8% next year. And this means dividends are expected to keep rising through this period too. Last year’s reward is predicted to edge to 102.8p per share in 2019, and again to 110.6p in 2020.

Subsequent yields of 2.1% and 2.3% might not be spectacular, but if you’re seeking strong and sustained dividend growth many years, I reckon Intertek is a great bet. Besides, given the company’s track record of delivering dividend growth above expectations I reckon actual payouts may blast past current predictions.

The post A FTSE 100 dividend growth stock I’d hold for the next decade appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The situation is becoming more and more perilous as well. The age at which Britons can look forward to retiring is edging further and further away and many of us will be knocking on the door of our eighth decade before we can think about throwing out the work uniform.

I don’t fancy working until I’m a septuagenarian, or having to scrimp and save once I finally retire. I’ve taken the bull by the horns and recently bought into some more brilliant FTSE 100 dividend stocks I’m confident could make me a fortune by the time I come to retire.

A quality selection

There’s a number of other income heroes that I’m very tempted to snap up too, like product testing giant Intertek Group (LSE: ITRK).

Financials this week disappointed brokers a little as the firm declared a 4.5% uptick in organic revenues during the three months to October. This didn’t bother me, though — there is a galaxy of structural growth opportunities that should allow Intertek to continue expanding the top line long into the future.

As it noted this week, “an increased focus of corporations on risk management, global trade flows, global demand for energy, expanding regulations, more complex sourcing and distribution operations, technological innovations, government investments in large infrastructure projects, and increased consumer demand for higher quality and more sustainable products.”

The indispensable quality assurance industry is already big business and is only going to get bigger and bigger as the global economy grows. City analysts expect an anticipated 1% earnings improvement for 2018 to increase to 8% next year, and this also means the company’s über-progressive dividend policy is predicted to remain in business as well.

Last year’s 71.3p per share reward, which itself was up more than 14% year-on-year, is likely to rise to 92.7p in the current period, or so say the number crunchers. And it’s expected to rise to 103.2p in 2019, meaning that 2018’s 1.9% yield jumps to 2.1% for next year.

The 7% yielder

If you’re looking for bigger yields though, and aren’t frightened of going against the grain, then Royal Mail (LSE: RMG) could be worth your attention.

The Footsie courier’s share price has almost halved in a little over six months as investors have feared the impact of a slowing UK economy on Royal Mail’s top line and have reacted to the firm’s missed cost-saving targets.  

There’s no doubt that these issues could carry over to 2019, but I still believe that the company’s long-term outlook remains robust as the growing internet shopping arena blows parcel volumes higher (these rose 6% in both the UK and at its GLS European division during the first fiscal half).

The bad news is that City analysts expect group earnings to fall in both of the years to March 2019 and 2020. But a bright outlook thereafter means that dividends are expected to keep heading higher — last year’s 24p per share reward is predicted to move to 24.6p this year and to 25.3p in fiscal 2020, meaning juicy yields of 7.5% and 7.7% respectively. Despite its current problems Royal Mail, like Intertek, is a share I’d be happy to buy now and hold until I retire.

The post 2 FTSE 100 dividend stocks I think could boost your retirement income as the State Pension age rises appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Take AstraZeneca (LSE: AZN), for example. Its share price has ballooned by more than 80% over the past five years even as the loss of exclusivity on revenue drivers like Crestor has pounded the bottom line.

Quite why the market remains upbeat isn’t a secret. Sure, a return to significant earnings growth may not have been achieved as early as many had been expecting. But the hard yards that the FTSE 100 firm has been putting in on the R&D front is finally starting to pay off.

The raft of product approvals over the past half a decade helped the sale of new medicines like Lynparza and Fasenra barge through the $1bn barrier in the first half of 2018. Even though the business has endured some development setbacks in recent years, the strength of its lab teams has still laid the groundwork for sales to rip higher once more.

Profits set to rebound

The rapid progression of AstraZeneca’s recently-launched products, and the encouraging progress seen across its bulging pipeline, clearly give plenty of reason to expect profits to explode sooner rather than later. The emphasis the firm’s putting on emerging markets gives me further grounds for optimism too.

Between January and June, sales to these developing regions rose 14% year-on-year, underpinned by exceptional medicines demand in China where AstraZeneca’s revenues leapt 33%. Sales were helped by the launch of lung cancer battler Tagrisso too, a product which drove total oncology product sales in the Chinese marketplace 57% higher from the same 2017 period.

City analysts expect the company to burst back into growth with a 12% rise in 2019. They may also be expecting dividends to remain frozen at 280 US cents per share through to then — a figure that yields a chubby, inflation-busting 3.7%, incidentally — but I’m confident that having turned the corner, dividends should follow profits higher again.

At current prices, AstraZeneca sports a forward P/E ratio of 22.5 times. Heady on paper, sure, but a figure that I still consider a snip given the rate at which the firm’s new medicines are flying off the shelves.

Testing titan

Intertek Group (LSE: ITRK) is another Footsie firm I believe contains millionaire-maker investment potential.

The inspection and product testing giant has a terrific record of lifting dividends and City analysts are not expecting the trend to end any time soon. Last year’s 71.3p per share payout is predicted to rise to 96p in 2018 and to 106.2p in the following 12-month period.

Subsequent yields of 2.1% and 2.4% for these years may not be anything to write home about. However, Intertek’s bright growth outlook (the City is anticipating further annual profits improvements of 1% this year and 9% next year), assisted by its insatiable appetite for acquisitions, mean that dividends should keep ripping higher for some time to come.

And this makes it one of the hottest income stocks on the FTSE 100, in my opinion. I’d happily buy Intertek alongside AstraZeneca despite its similarly-high paper valuation, a forward P/E multiple of 22.9 times, as the possibility of creating a million-dollar portfolio — along with some other choice stocks from the Footsie — with both or either is too good to miss.

The post Why I believe investing in these FTSE 100 dividend stocks could make you a millionaire retiree appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended AstraZeneca and Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

My opinion that the assurance, testing, inspection and certification services provider is a brilliant buy remains unchanged despite the chilly reception to latest trading numbers released on Tuesday. Investors reacted badly to the news that revenues dropped by a bigger-than-expected 1.8% during the January-June period, with lower year-on-year sales of £1.35bn reflecting severe currency headwinds and slowing sales at its Products and Resources divisions.

It’s worth noting, however, that organic revenue still rose 3.4% in the period. Sure, this indicates a reduction in recent months — sales on a comparable basis had increased 4% in the first four months of 2018 — but this can in some part be attributed to the loss of a working day in the last half.

Acquisitions keep on coming

The bearish sentiment washing around this week does not feel right for of a company whose sales performance remains broadly robust, and whose position in the massive global quality assurance industry (which Intertek values at $250bn) is growing thanks to its dedication to M&A.

It made another three acquisitions in the first half of 2018 to build its geographical and operational footprint, and made a huge statement with the $480m purchase of North America’s Alchemy Investment Holdings, a big player in the food industry’s people assurance segment.

It’s no surprise that the City is still expecting earnings to keep rattling higher despite the top-line reversal of the first half, although admittedly predicted rises of 2% in 2018 and 8% in 2019 aren’t enough to get pulses racing. What is, though, is the rate at which dividends are expected to advance, with current forecasts being buoyed by Intertek’s decision to hike the interim dividend by more than a third year-on-year to 31.9p.

This upsurge reflects the company’s decision last year to raise the dividend payout ratio to 50% from 2018, the ambitious target supported by its strong growth outlook and its exceptional cash generation (free cash flow clocked in at £90.6m between January and June).

Dividends striding higher

And so back to those dividend forecasts: presently the number crunchers are anticipating that last year’s total payout of 71.3p per share will jump to 90.4p in the current period, and again to 98.2p in 2019.

Subsequent yields of 1.7% and 1.8% for these respective years may be handy rather than spectacular, but the rate at which Intertek looks likely to keep growing dividends should excite the interest of long-term investors.

It’s a dead cert that Intertek’s high valuation prompted Tuesday’s 10% share price slide. And even despite the sell-off, the company still sports a forward P/E ratio of 27.2 times, almost double the widely-accepted value benchmark of 15 times.

I retain my bullish take on the business even with its still-hefty rating, however, and reckon the recent pullback is a splendid buying opportunity.

The post Have £1,000 to invest? This FTSE 100 dividend growth stock could help you to retire early appeared first on The Twelfth Magpie.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Last week the FTSE 100 firm advised that group revenues rose 4.4% at constant exchange rates in the four months to the close of April, to £861.2m. Intertek said that this improvement was “driven by a good organic growth of 4% at constant rates and by the contribution of the acquisitions we made recently in attractive growth and margin sectors.”

The headline number was less impressive and thanks to adverse currency movements, the business actually saw revenues slip 2.5% from a year earlier. It’s not a surprise to see market makers ignore this reversal however, and send Intertek’s share price to within a whisker of last autumn’s record above £54 per share.

Products still improving

The market cheered news that the breakneck momentum at Intertek’s core Products arm has continued, and organic sales here rose 6.6% during the first four months of 2018, speeding up from the 5.5% advance printed in 2017.

And Intertek believes there is much more to come, the firm commenting that the division “will benefit from mid-to-long term structural growth drivers including product variety, brand and supply chain expansion, product innovation and regulation, the growing demand for quality and sustainability from developed and emerging economies, the acceleration of e-commerce as a sales channel, and the increased corporate focus on risk.”

Elsewhere, the business saw organic sales at its Trade and Resources units rise 0.6% and 0.3% respectively in the period.

A quality selection

The global quality assurance market is worth many, many billions of pounds, and thanks to its broad geographic and sector diversification – it has in excess of 1,000 sites in more than 100 countries – Intertek is well placed to latch onto this opportunity.

What’s more, Intertek remains busy on the acquisition trail to boost its operational and territorial bulk. Last month it snapped up Colombia-based Proasem which is “a leader in laboratory testing, inspection, metrology and training services” for an undisclosed fee. And Intertek’s impressive cash generation should keep the M&A action coming thick and fast (free cash flow of £341.6m in 2017 was up 7.4% year-on-year).

Dividends to keep bouncing

Intertek has proved to be a brilliant pick for dividend chasers in recent times, the company hiking the dividend 35% over the past three years alone. And thanks to its strong balance sheet and bright earnings outlook — the City is expecting bottom-line advances of 1% and 8% in 2018 and 2019 alone — share pickers can look forward to further dividend rises.

Last year’s 71.3p per share payment is predicted to bound to 89.7p this year and again to 98.2p next year, estimates that create yields of 1.7% and 1.8%.

Intertek’s forward P/E ratio of 27.3 times might be expensive on paper, but in my opinion this is a small price to pay given the company’s significant structural opportunities and its exciting growth strategy, factors that should keep dividends growing at quite a pace.

The post 1 FTSE 100 growth and dividend stock I’d buy with £5,000 today appeared first on The Twelfth Magpie.

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• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Box beauty

Smurfit Kappa Group (LSE: SKG) saw its share price enter lift-off during Wednesday trading on the back of fresh takeover speculation. The share was last 6% higher on the day.

The packaging play has been in the headlines in recent sessions after rejecting the overtures of US rival International Paper. The Footsie firm, which rebuffed an €8.6bn takeover bid yesterday, affirmed its opposition to the deal today by commenting that “the board has unanimously rejected it on the basis that it fails entirely to reflect the group’s superior prospects as an independent business and represents a valuation multiple significantly below recent comparable transactions.”

One should not be surprised if the North American giant swoops back in despite being rebuffed. As the boffins at UBS point out, a tie-up would give International Paper a far superior foothold in Europe where Smurfit Kappa is of course a major player. The US company sources just a quarter of group profits from Europe and Russia right now.

And the deal would make sense given that both businesses are giants in the production of Kraftliner packaging in their respective markets.

In demand

Smurfit Kappa hasn’t been without its share of problems in recent times as a cocktail of rising costs has hit profits growth. While revenues improved 5% year-on-year in 2017, to €8.56bn, pre-tax profit slumped 12% to €576m.

However, it is finally beginning to turn the corner. It is proving increasingly successful in recovering these higher input costs from its customers. And it is also witnessing rising demand for its products, helped by the supply crunch washing over the market.

In this environment City brokers are expecting earnings to burst higher again from this year onwards, and they are forecasting bottom line growth of 26% in 2018 and 4% next year. And I am confident Smurfit Kappa’s commitment to M&A should keep profits on an upward trajectory further out.

Investors should notice that the business can be picked up on a forward P/E ratio of just 15.3 times. This is far too low given the cardboard box maker’s bright earnings picture, not to mention the possibility of a potential suitor coming back with an improved bid.

A quality selection

Those seeking strong growth bets from the FTSE 100 should also give Intertek Group (LSE: ITRK) a close look today.

Sure, City brokers may be expecting earnings to edge just 2% higher in 2018, marking a departure from the double-digit rises of recent years. Another 8% rise is forecast for next year. But I am convinced the bulging quality assurance market (which Intertek currently values at $250m) provides plenty of opportunity for the business to keep grinding out profits progress year after year.

The company saw organic revenues at its Products and Trade-related divisions — which collectively account for more than nine-tenths of total earnings — rise 4.8% in 2017, the firm advised this week. And like Smurfit Kappa, Intertek remains committed to hunting down acquisitions to keep sales moving on.

I believe the business is worth a serious look even in spite of its high forward P/E ratio of 25.2 times.

The post 2 FTSE 100 growth stocks to put in your ISA appeared first on The Twelfth Magpie.

More reading

• With a yield of 6.8% and a P/E ratio of 12.1, is this a dirt cheap FTSE 250 stock to consider?
• Will SpaceX, Nvidia, or Alphabet be the first $10trn stock?
• Up 95%! This FTSE 100 stock’s outperformed Nvidia over the past year
• With a 9.3% yield, is this an amazing opportunity to consider buying dirt-cheap Taylor Wimpey shares?
• How much do you need in a Stocks and Shares ISA to aim for £375 a week in retirement?

Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has recommended Intertek. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.